Value Streams Focus on Customer Value.

This is the second blog about why a value stream organization makes sense for most lean companies.Customer value is the first of the 5 Lean Principles, and all truly lean companies need to start their lean journey with a deep understanding of how the customer values the services and products your company provides. When your company is organized by value streams, the value stream team can clearly focus on the value they create for the customer. They are all involved in creating value, and the team has full “soup to nuts” responsibility for the value stream operation..

Some companies make the mistake of thinking a value stream manager’s job a manufacturing or operations function. A value stream manager is a business person with responsibility for the sales, delivery, and support of the company’s products to the customer. The value stream manager – and the value stream team – have clear line-of-sight to the customers. This leads to a deeper, first-hand understanding of customer needs and responsibility to fulfill those needs better than any competitor.

Different Value Stream Organizations

Value streams can be set up in different ways. They must always be set up based on flow; generally material flow and/or information flow. But this can be done in many different ways. Some companies organize their value streams around a family of products with similar production or material flows. Others organize around different customers or markets that have different value needs. One company we work with has recently organized their value streams around standard products and customized products, because there are very different flows in sales, engineering, purchasing, production, and delivery.

The purpose of these different kinds of value stream organization is to focus attention directly on the value created for the customer.